INVEST in GREECE agency

Newsletter View

Newsletter May 2013

NEWSWIREPublic Power Corporation—Restructuring and Privatisation

The Greek government unveiled a plan on May 15 for the restructuring and privatisation of the Public Power Corporation (PPC)—the country's electricity utility—which envisages the creation of a "small PPC" with representative electricity production units to be sold to private investors, in its search for a strategic investor for PPC and the selloff of 40 percent of the electricity grid networks.

The plan, presented by the Ministry of Environment, Energy and Climate Change, has a timetable of completion by 2015 and is included in a memorandum of economic policy agreed with the troika. Ministry officials said the plan will raise revenue for the state through the privatisation of PPC, while it will also ensure the creation of healthy competition in the market and the liberalisation of the electricity market in Greece.

The plan envisages:1. The separation and privatisation of the System Administrator, paving the way for PPC's exit from energy grid networks. In the first phase, to be completed this year, the plan envisages the entry of an investor through a share capital increase scheme offering up to 49 percent of the equity capital and the management. In the second phase, to be completed in the second quarter of 2014, the investor will be able to acquire at least 51 percent of the equity capital, with the state holding a statutory minority stake.

2. Creating a new vertical electricity company, which will own around 30 percent of PPC's existing production capacity and new units, along with a relative percentage of PPC's commercial activities. It will include lignite, hydro-electric and natural gas units. This project will be agreed on in consultation with the European Commission by the end of 2013, although early estimates are for 1,400 MW of lignite units, 500 MW of hydro-electric and 500 MW of natural gas units. The tender to sell the so-called "small PPC" will be made with the Hellenic Republic Asset Development Fund. These procedures are expected to be completed in the first quarter of 2015.

3. Privatisation of PPC. Under the plan, the state will offer 17 percent of the company's equity capital to a strategic investor—from 51 percent currently owned by the state. This process is expected to be completed by the end of 2015 or early 2016.

The plan for the restructuring and privatisation of Public Power Corporation was presented by the government to the European Commission.

In a letter to the representative of the European Commission in the troika, Matthias Morse, Finance Minister Yiannis Stournaras and Environment, Energy and Climate Change Deputy Minister Asimakis Papageorgiou, underlined the benefits of the plan both to the Greek economy and the country's energy market.

The two government ministers stressed that the plan was a very significant step towards improving competition of the Greek economy.

The Chinese Academy of Space Technology will sign a cooperation deal with the Greek Association of Space Technology and Applications Industries (EVIDITE), which represents 21 businesses with an annual turnover of about 20 million Euro.

The President of EVIDITE, Thanasis Potsis, along with the president of the Greek Semiconductor Industry Association (ENEVI) and HELIC founder Giorgos Koutsogiannopoulos met with the management of the Chinese institute and discussed cooperation opportunities.

The Chinese suggested cooperating on space sensors, non-military remote sensing, and developing digital technologies for the radio navigation systems for the Galileo satellite and communications system.

In parallel, EVIDITE and the Corallia Greek Technology Clusters Initiative have signed an accord with the General Secretariat of Research and Technology for the development of a space cluster in Athens that will encourage the development of space research and technology.

The EVIDITE-Corallia proposal focuses on developing a dynamic industrial space technology cluster. The business plan provides for two levels, one of support services and another focused on research and product development. The goal is to create a space technology market in Greece over the next five years. The Ministry of National Defense will act as an advisor.(Source: To Vima)

German-Greek RES CooperationThe German government is to work with Greece to further develop its renewable energy sector under an agreement signed by the two countries and the Greek EU taskforce.

The accord, which entails German cash and advice, aims “to improve the general conditions for the development of renewable energies in Greece,” a German environment ministry statement said.

Berlin will provide 250,000 Euro of a one-million-Euro budget earmarked for the initial phase of the project, with the European Commission providing the rest.

In Germany renewable energy is subsidised and currently makes up 20 percent of the country’s electricity production.

In the economic investment environment in Greece, with many years of experience in construction, operation and maintenance including management, the Greek project team of Sky Solar made timely adjustments in technology, manpower allocation and project management to break through many challenges and ensure the successful grid-connection of the overall project.

These projects involved several regions as well as many functions including development, approval process, design, investment and financing, construction and also grid-connection.

Greece has excellent solar resources with an average amount of solar irradiation 40% higher than that of Germany.

As a part of the EU electricity grid, Greece not only transmits and sells the electricity to the European countries short of electricity, but also attracts EU countries and enterprises to invest in photovoltaic power generation in order to accomplish its goals of renewable energy sources.

Having analysed and studied the market, Sky Solar began to invest in the Greek PV renewable power business in 2007 and has since been very successful with this investment. Sky Solar’s 70MW PV power plant is composed of 40MW and 30MW project packages, and the average sun irradiance of the project areas is over 1500 hours per year. The 40MW project was grid-connected on January 28, 2013, while the 30MW project was grid-connected on March 12, 2013. These two projects are entitled to a 20-year Greek PV FiT subsidy, and the electricity price is locked between 0.29 Euro/kWh – 0.44 Euro/kWh.

Following COSCO’s large investment in the Port of Piraeus Container Terminal, Sky Solar is the largest Chinese investor in Greek renewable energy sector and is playing an instrumental part in laying the foundation for safe investments for other Chinese enterprises, while also assisting in the export of Chinese products.

Mr. Weili Su, Chairman of Sky Solar commented that "the investment in Greek PV power projects is of great significance for the promotion of the development of renewable energy in the Greek economy as well as the achievement of EU’s renewable energy target." "We can, with the rich solar natural resources available, the competitive electricity price in Greece, and the importance of solar energy for governments, stimulate national economic growth.

The Greek renewable energy market still has great potential, and Sky Solar will continue to strengthen the investment and operation and maintenance in renewable energy power projects in Greece."

Greek Yoghurt Must be From GreeceGreek yoghurt has to be from Greece—that is the verdict in the legal battle between Total Greek Yoghurt maker Fage and newcomer Chobani.

Justice Briggs granted Fage a permanent injunction against Chobani, which prohibits the company from marketing its U.S.-made yoghurts as ‘Greek’ in the UK, and awarded Fage legal costs. Fage had demonstrated there was “sufficient goodwill” associated with the term Greek yoghurt, and most consumers who bought it expected it to be made in Greece, the judge said. This was underlined by a “labelling convention” in the UK, which meant manufacturers of thick and creamy yoghurts not produced in Greece called their yoghurts ‘Greek-style.’ Chobani calling its yoghurts ‘Greek’ therefore amounted to “misrepresentation,” Judge Briggs said. Chobani argued its yoghurt pots clearly stated the products were made in the U.S., but the judge said the information was in very small print and at the back of the pot.

Fage UK MD Nigel Amos said he was “delighted” with the verdict, which had delivered the right outcome for consumers. “They rightly want to know the heritage of their food—its content, its nature and where it comes from,” he said.

US Investors Plan Hellenic Hedge Fund International investors are increasingly convinced Greece is about to emerge from its crisis and are eager to invest in the Greek success story, which would provide the local economy with some desperately needed capital when implemented.

Investor Daniel Loeb’s global fund management company Third Point LLC is proposing to its members the creation of hedge fund exclusively for Greece under the name Third Point Hellenic Recovery Fund, which will invest in local firms under restructuring (“event-driven corporate situations”) and in Greek assets. Mr. Loeb has earned billions of Euro through his purchase of Greek bonds following the assurance of the Eurozone in September 2012 that it would not allow Greece to crumble.

Bloomberg reported that in his quarterly letter to Third Point shareholders, Loeb stressed that he is convinced Greece will stage a dynamic recovery and that he intends to participate in the rebound both as a bondholder and through private equity investments.

“The Greek market is relatively small, but the nation is starved for capital and we intend to invest in strong enterprises run by talented groups,” the fund manager wrote. The Third Point Hellenic Recovery Fund will gradually release funds when investment opportunities arise. Among the investments it has examined is gaming company OPAP.

Third Point has reaped yields of 21 percent from Greek bonds whose price has risen considerably in the last six months, and joins U.S. firms including Oaktree Capital Group LLC and Fortress Investment Group LLC in searching for bargains in Greek assets.

This comes in the same week as encouraging statements from US billionaire Wilbur Ross who, two weeks after his meeting with Prime Minister Antonis Samaras, went on the record saying that Greece’s continued efforts to restructure its economy could again render it an attractive destination for investments.

Russian Investment InterestHundreds of Russian entrepreneurs “want to put their money in Greece” but are forced to put their plans on hold because they lack information on the Greek market, St Petersburg Union of Industrialists and Entrepreneurs President Sergey Vladimirovich said in Thessaloniki on Thursday. To cover the gap, he suggested the establishment of an investment information office for Greece in the Russian city.

Speaking in a press conference in the context of the 1st ERMIS Greek Russian Business Forum hosted in Thessaloniki, he pointed out that Russian investors are mostly interested in the sectors of tourism, infrastructure, construction and energy.

Mr. Vladimirovich, who owns real estate in the Halkidiki peninsula, northern Greece, noted that in Greece he “feels at home, and the more businessmen come to Greece feeling at home, the stronger the economy will become.” He added that he and his family feel as safe and comfortable in Halkidiki as they feel in St Petersburg.

Addressing the forum earlier, he expressed satisfaction about the improvements made in visa issuance for Russian citizens wishing to visit Greece, noting that the people of St Petersburg, a city with a population of over 5 million, “can become very good customers for any Greek product.”

Greeting the forum participants, Macedonia-Thrace Minister Theodoros Karaoglou referred to the good bilateral economic relations between the two countries, noting that Greek exports to Russia increased by 22 percent in 2012, and added that Greece expects roughly one million Russian tourists this year.

Business meetings between representatives of 48 Russian companies and hundreds of Greek companies were scheduled in the context of the two-day forum, hosted by Greek Russian Center ERMIS, a not-for-profit company founded by the Chambers of Serres, Halkidiki and Kavala.

EIB, in a statement issued May 17, said that a loan worth 190 million Euro will be offered to Public Power Corporation to fund projects of energy security and efficiency. It has approved a loan facility worth 950 million Euro in 2009 for energy projects in Greece; the latest loan is the last tranche.

The Bank is also offering a 25-million-Euro loan to DESFA to expand its natural gas transportation system to the Peloponnese through a high-pressure pipeline. This pipeline will be used for the operation of a combined cycle electricity production power station in Megalopoli which is also funded by the European Investment Bank (280 million Euro in the 2011-2012 period).